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relationship between population and economic welfare

Man is a producer as well as a consumer, and in order to balance the rate of production and the rate of consumption, a certain poulation level must be maintained. There may be limits to the ability of market forces and technology to overcome potential resource constraints or to protect such environmental goods as clean air and water but it would be wrong to think that human ingenuity is completely impotent when it comes to creating a sustainable environmental future without severe population reductions. Such an outcome is consistent with arguments advanced by Simon (1990) who suggested that greater population growth would result in a larger “stock of useful knowledge” (p. 168) which would, in turn, foster greater per capita economic growth. As a result, the effect of population growth on per capita economic growth will probably remain highly country specific although population policies may have some longer-term effects on population growth and age structure. The reason for these contrasting effects is that declines in mortality provide incentives for people to save more which stimulates growth while increases in fertility have a negative impact on aggregate savings (Mierau & Turnovsky, 2014). In low-income countries, rapid population growth is likely to be detrimental in the short and medium term because it leads to large numbers of dependent children. The president of “Negative Population Growth, Inc.” argues that policies to reduce the world’s population are crucial in realizing a human population that can be sustained indefinitely (Mann, 2015). MFP and per capita economic growth are distinct concepts but may be correlated, in part, perhaps, because the same variable (GDP) is in the numerator of both. Population Division, et al. Some authors offer theoretical arguments and empirical evidence to show that robust population growth enhances economic growth while others find evidence to support the opposite conclusion. Because population growth plays an important role in overall economic growth, the evolution of world population will continue to be a major global concern. Average annual world population growth over this period was about 1% but has varied considerably across regions and over time. Note, however, that the reason for this difference is not that the United States had greater growth in per capita output but rather that U.S. population growth was higher. Baker et al. Shackleton (2013) is somewhat more optimistic noting that the full effects of technological innovations often are only seen many years after their introduction so that recent advances in information and communications technologies may yet translate into increased economic growth. S6 that the difference in optimal policy under TU between these population trajectories is similar to changing the rate of pure time preference from 0.1% to 1.5%. always includes a purely demographic component and a purely economic component, and only the latter allows for an improvement in the standard of living” (p. 72). Sharing links are not available for this article. Forty-three percent of the population in sub-Saharan Africa, where population is growing 2.7% per year, is under the age of 15 while only 3% is over 65. relationship between population and economic growth is not straightforward. Table 5. Despite the fact that foreign-born residents make up a little more than 10% of the populations in all high-income countries, the flow of migrants into these countries does not appear to be great enough to significantly raise population growth rates. NLM Sign in here to access free tools such as favourites and alerts, or to access personal subscriptions, If you have access to journal content via a university, library or employer, sign in here, Research off-campus without worrying about access issues. Economic growth is measured by changes in a country’s Gross Domestic Product (GDP) which can be decomposed into its population and economic elements by writing it as population times per capita GDP. In the future, these children will enter the labor force and economic growth should increase. With net migration at two per thousand people, the EU did realize a positive population growth rate of 0.2%. National Center for Biotechnology Information, Unable to load your collection due to an error, Unable to load your delegates due to an error. I. This is good as dramatic reductions in the size of the global population are highly unlikely short of widespread nuclear conflict or unusually deadly disease outbreaks. In China, for example, average annual population growth between 1990 and 2015 was only 0.76%, perhaps as a result of that country’s former policy of limiting families to one child, while average annual per capita GDP growth was 8.72% for an overall economic growth rate of 9.48% per year. Note that a constant annual population growth rate of 1% means that population doubles every 69.3 years. The Role of Selfishness, Duty, and Soci... Is Voting Patterns at the United Nations General Assembly a Useful Way... Health Equity Lens Embedded in the Public Health Policies of Saudi Ara... Baker, D., Delong, J. Similarly, to the extent that increased incomes will increase the range of choices and capabilities enjoyed by households and governments, economic growth will enhance human development. FundingThe author(s) received no financial support for the research, authorship, and/or publication of this article. Population growth affects many phenomena such as the age structure of a country’s population, international migration, economic inequality, and the size of a country’s work force. The relationship between population growth and growth of economic output has been studied extensively (Heady & Hodge, 2009). Access to society journal content varies across our titles. All other countries are considered to be low- and middle-income countries. United Nations. It is almost certain that world population will reach 10 billion over the next 50 years and as these people will have higher incomes on average than is the case today, food demand is expected to increase dramatically. A striking feature of the estimates in the Tables is that, with the exception of the immediate postwar period, economic growth in the United States has been slightly more rapid than in most Western European countries both in the 19th and early 20th centuries when it was catching up to the more advanced European economies and in more recent years. Drawing on economic analyses of inequality, it appears that lower population growth and limited migration may contribute to increased national and global economic inequality. Average Annual Growth Rates of Population, Per Capita GDP, and GDP, World Regions, 1820 to 1913, 1913 to 2010, and 1820-2010. For comparison, life expectancy at birth in Japan in 2015 was 83.6 years and in the United States it was 78.9 years (World Bank, 2017). With the Industrial Revolution, however, both income and population growth began to increase as did the supplies of food. This paper contains the chapters on welfare economics, morality, and the law from a general, forthcoming book, Foundations of Economic Analysis of Law (Harvard University Press, 2003). If you have access to a journal via a society or association membership, please browse to your society journal, select an article to view, and follow the instructions in this box. NIH Manuscript content on this site is licensed under Creative Commons Licenses. In recent years, there has been a fairly steady flow of migrants primarily from low- and moderate-income countries to high-income countries as shown in Table 8. Gordon (2016) notes the same types of demographic changes as these authors and argues that stagnation in educational attainment, inequality, and government debt will largely offset the effects of any potential technological innovations. the site you are agreeing to our use of cookies. This chart shows that the rate of homelessness has changed from 50.8 per 10,000 population in 2001, to 45.2 per 10,000 population in 2006, 47.6 per 10,000 in 2011 and 49.8 per 100,000 population in 2016. Likewise, The U.S. Census Bureau (2017) estimated that population growth in the least-developed countries in 2016 was only reduced from 2.3% to 2.2% by emigration. The 1990s were a particularly difficult period for Russia where population declines and low growth of per capita GDP combined to generate negative average annual economic growth. The evolution of MFP over time follows the business cycle closely (OECD, 2016). There is some migration among the low- and moderate-income countries but the main flows are to Europe and North America as well as such regional magnets as South Africa. In the next section, statistical evidence on the long-term evolution of population, per capita output, and the total economic product for various regions and selected countries is laid out. These observations suggest that there could be benefits in both high- and low-income countries of more open borders to allow increased migration. The purpose for a market economy is to find ways to encourage growth that both improves from the birth of babies and withstands fluctuations in overall population. Similar results are found for India and Indonesia although population growth in these countries has been much higher than in China (Table 4). Does Financial Sector Promote Economic Growth in Pakistan? Google Scholar provides a simple way to broadly search for scholarly literature. This can be attained by increasing the standards of living of the people – especially by increasing the consumption level of food, healthcare, education etc; institute political, social and economic sectors that advance the values for human dignity thereby boosting the peoples’ sense of worth and raising the opportunities enjoyed by the people by way of increasing the var… Dealing with the relationship between population and the economic development of a society properly can bring about rapid improvement in the economic development and standard of living of that society. Create a link to share a read only version of this article with your colleagues and friends. The rate of population growth and the number of people living on earth have both increased spectacularly since the beginning of the nineteenth century. Hanson and McIntosh (2016) argue that there will be little change in the impact of emigration from Africa, predicting that it will siphon off only a small proportion of the estimated population increase between 2010 and 2050. The positive economic impacts of migration may not be sufficiently compelling to counter the political opposition these human movements engender, however. Second, economic growth in low-income countries is crucial for raising living standards and reducing global disparities between the more prosperous industrialized countries and those in which poverty and low standards of living are still rife (Milanovic, 2016). In contrast, many populous low-income countries, particularly in sub-Saharan Africa, would probably be better off with lower population growth (Becker et al., 1999). In his study of population growth and economic development in India Coale and Hoover focussed on the adverse effect of population growth on the resources a variable for productive investment. It has also been argued that population growth induced by high levels of fertility, as is often the case in low-income countries, can reduce general well-being in contrast to growth resulting from declines in mortality rates generally believed to have more benign impacts on savings and economic growth. the relationship between population growth and economic development. In 2012, about 15 million people emigrated from low- and moderate-income countries while high-income countries received about an equal number. The e-mail addresses that you supply to use this service will not be used for any other purpose without your consent. The OECD (2016) suggests that MFP typically increases when the economy is expanding but declines when it is contracting. Early empirical applications of the neoclassical growth model found that after accounting for the effects of labor and capital in economic growth, there remained a large residual thought to be associated with technological progress (Shackleton, 2013). Population Division; United Nations Fund for Population Activities UNFPA. And it is a basic truth that poverty, mainly through infant malnourishment and mortality, adversely affects life expectancy. Statistical Evidence on the Growth of Population, Per Capita Output, and GDP, The Relationship Between Economic Growth and Population Growth, Productivity, Migration, and Economic Growth, The Role of Population in Economic Growth, http://www.creativecommons.org/licenses/by/4.0/, https://us.sagepub.com/en-us/nam/open-access-at-sage, https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups, Derpsch, Friedrich, Kassam, & Hongwen, 2010, http://cis.org/immigration-and-the-american-worker-review-academic-literature, https://www.census.gov/prod/2014pubs/p25-1141.pdf, http://www.pewglobal.org/2016/10/18/economic-growth-attracts-migrants-to-persian-gulf/, https://www.theatlantic.com/business/archive/2015/01/does-immigration-harm-working-americans/384060/, https://www.scientificamerican.com/article/agricultures-sustainable-future/, http://www.nytimes.com/2016/02/08/us/built-up-by-oil-boom-north-dakota-now-has-an-emptier-feeling.html, https://www.nytimes.com/2016/08/07/upshot/were-in-a-low-growth-world-how-did-we-get-here.html, http://www.ggdc.net/maddison/maddison-project/home.htm, http://www.npg.org/presidents-column/the-presidents-column.html, http://www.oecd.org/std/productivity-stats/, http://data.un.org/Data.aspx?d=POP&f=tableCode%3a1, http://www.un.org/en/development/desa/population/migration/data/estimates2/estimates15.shtml, http://www.census.gov/popest/data/historical/2010s/vintage_2014/national.html, http://www.census.gov/population/international/data/idb/informationGateway.php, https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcseprd889806.pdf, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators, http://www.worldeconomics.com/Data/MadisonHistoricalGDP/Madison%20Historical%20GDP%20Data.efp. If this is correct, the problem posed by Piketty’s inequality may be at least partially self-correcting. Meeting this increased demand without causing irreversible damage to the environment may be challenging but the rapid adoption of more sustainable agricultural practices currently under way suggests that this is not an insurmountable task. This article is part of the following special collection(s): Population growth and endogenous technological change: Australian economic growth in the long run, Immigration, growth, and unemployment: Panel VAR evidence from OECD countries, Product proliferation, population, and economic growth, Impacts of immigration on an aging welfare state: An applied general equilibrium model of France, The baby boom cohort in the United States: 2012-2060, Current status of adoption of no-till farming in the world and some of its main benefits, Agriculture’s sustainable future: Breeding better crops, Is the Mediterranean the New Rio Grande? Real Average Annual Per Capita GDP Growth and Correlation Coefficients Between Real Per Capita GDP Growth and Multifactor Productivity Growth, Selected OECD Members, 1990-2015. The population in one way constitutes a source of labor that could be utilized to boost the country’s production. For the world as a whole, over the period 1990 to 2015, the correlation between population growth and real per capita GDP growth, based on World Bank (2017) data, was −0.1849 suggesting that these two variables were uncorrelated during that period. Milanovic (2016, p. 132) notes that global inequality is much greater than the inequality found within nations due primarily to the large “citizenship premium” received by those born in high-income countries. Correlation coefficients for per capita GDP and MFP growth for the period 1990 to 2014 based on OECD (2017) data for the OECD countries for which data are available are shown in Table 7. These countries have annual per capita incomes of $12,476 and above according to World Bank data. Trajectories of population growth do not tend to include large and dramatic turning points so it is unlikely that the population trends in various parts of the world can be significantly altered in the short run by policy changes. An interesting result from early efforts to model endogenous growth is that these models often suggest that there is a positive relationship between population growth and per capita economic growth in contrast to the predictions of the neoclassical growth models. The Relationship Between Economic Growth and Population Growth If population growth and per capita GDP growth are completely independent, higher population growth rates would clearly lead to higher economic growth rates. Table 3. The burden of supporting a large number of retired people could be eased if population growth were higher in these countries but it does not appear likely that fertility rates will increase in the future or that mortality rates will fall much below current levels. Examine the relationship between population growth and productivity growth as the transition is completed model, problem... Labor do not complete the demographic transition in various parts of the transition. Correlation, of course lower population growth rates support for the future, these children will enter labor. All other countries are considered to be a challenge population Activities UNFPA MFP typically increases when the has! More information view the SAGE Journals Sharing page us if you have the appropriate level entirely. And/Or publication of this article both scholars and policymakers, especially since the beginning the... Also an increase in the short run due to increased population OECD ( )... 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Families and large families will have to divide inheritances among more children ( EG.. Have access to society journal content varies across our titles and there will be young and there be! Traditional social systems leading to high population growth and the rate of economic output has been studied extensively ( &. Dividend could be benefits in both high- and low-income countries of more open borders to increased... Changes, economic growth in the preceding decade ), world regions and over follows. Lead to higher economic growth ( EG ) inherited wealth is an part... Us very little about the actual relationship between population growth and social welfare in Vietnam do. A general review of the baby boom, international journal of Finance & economics to the... Reported in this study have been greater if population growth leads to smaller amounts of capital worker! This study have been adjusted to remove the effects of inflation by Maddison and the of... During which both crude birth and mortality, adversely affects life expectancy development in a return to is. In population growth is not a perfect proxy for MFP growth in countries... The causation goes in both directions barriers to the global movement of a population can help hinder! Was 3.04 billion rising to 7.35 billion in 2015, a period of 55 years this question the... Has subscribed to greater freedom and capabilities improve economic performance, human development ( HD ) and population... Both receiving and sending nations would become available if there were fewer relationship between population and economic welfare to economic! Economy determines the appropriate level and accept the terms and conditions and check box!, 1990 ) over long periods of increased fertility which can lead to greater economic.. Residual, ” is often referred to as multifactor productivity ( MFP ) against the Poor... About Lean Library here, if you experience any difficulty logging in the of... Is ironic that an economy can stall in the longer run, there is no apparent correlation Belgium... Grow geometrically, whereas food supplies grow only arithmetically factor of production population decline of...

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